E-commerce, or electronic commerce, can include any type of transaction which requires electronic transmission of data.  Fraud, in this respect, can include the most obvious type being online transactions, as well as a far range of other activities from the swiping of a stolen credit card at a grocery store to the electronic embezzlement of money by an employee within a company.  E-commerce fraud is different than that of other specific industries or situations.  It encompasses such a large span of industries, activities, and data types; it is a relatively new concern since the internet has become prominent In most households only within the past 15 years resulting in lack of education and security concerns for many users especially since verification of identity is difficult without face to face encounters.  As with many types of fraud, E-commerce fraud targets the consumer as its primary victim, leaving many individuals at risk.  

Fraud may occur within organizations as well as outside organizations; it can be perpetrated by a business, a consumer, or a person posing as someone they are not.   Within an organization, management or employees can perpetrate a fraud.  Since they are inside of the company, they have the advantage of being inside the company’s computer network, meaning they do not have to get through external security to access information.  This type of fraud can compromise accounting information, company confidential data, or personal information relating to both customers and employees.  Sniffing may be used to view data passing along the network, where an employee can gain access to a wealth of information which they are not authorized to access, and this data can be used for personal advantage.  

Fraud from outside an organization can be perpetrated by consumers, hackers, or others who may pose as someone who they are not.  This may include illegitimate vendors, organizations, or individuals, as well as consumers impersonating someone whom they have stolen identity from.  As mentioned before, fraud in e-commerce has become such a great concern largely because of the inability to verify the identity and location of those who are dealing with each other, as well as security risks that may be not be recognized.  Fraud outside organizations may or may not be against organizations, and the lack of education associated with risks is often the greatest opportunity presented to perpetrators.    

Fraud outside an organization, but against an organization may include intrusion into their computer systems, but more often is related to identity theft, where a perpetrator has stolen someone’s identity to make purchases from another person’s account, open accounts with someone else’s name, credit, or social security number, or, a person may even impersonate another when legal trouble arises.  Other types of fraud outside an organization can include illegitimate businesses, most commonly occurring in auction fraud where a person makes an auction sale and the consumer is delivered inferior goods or nothing at all.  Web site hijacking occurs when a web page or site is created to resemble that of a legitimate business and consumers may be taken for payment or personal information believing that they are dealing with a well known organization, when in fact they are dealing with a third party who is attempting to fool an unsuspecting person; and the creation of bogus internet companies may also fool consumers into purchasing products from someone who does not have a legitimate business at all.  They may have a full blown web site offering high priced electronics at unbelievably low prices, and when a payment is made, the unsuspecting consumer has compromised their personal information to be used by the fraudster for whatever purpose was intended by the web site operator, usually theft of data or money.    

Other e-commerce frauds can include email scams such as Nigerian letter scams offering millions of dollars to a person who will help transfer funds out of Nigeria, other advance fee schemes where a person is promised a large sum of money for a small amount down, health insurance fraud may require individuals to supply insurance information in exchange for free medical equipment where insurance claims are submitted but equipment is not received, phishing attempts will pose as financial institutions or other accounts which suggest that the consumer “verify” personal information but it is not actually that purported organization which has sent the request, counterfeit prescription drugs may be offered at low costs and the drugs received are not the drugs promised and may cause serious health concerns especially with elderly, investment scams including pyramid schemes or letters of credit, and finally viruses or spyware that may be obtained through clicking on attachments or downloading free software.  There are many others as well, but these seem to cover the most popular frauds.  

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How can these frauds be identified? How can they be prevented?  What can be done if they occur?  Many people ask these questions as they enter bank or credit card information into an order form.  They proceed nevertheless, submit the order, make payment, and hope that all goes well and the goods will be delivered under the conditions promised.  Symptoms of e-commerce fraud within an organization are the same as we have studied in chapter 5; however the other types are a bit different.  Since those frauds regarding organizations are similar to those studied in class, I have focused on ...

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